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Florida Audit Reports
Issue Date: August 14, 2007
Audit
Report No.: 2007-AT-1010
File Size: 3.24MB
Title:
The Cathedral Foundation of Jacksonville, FL, Used More Than $2.6
Million in Project Funds for Questioned Costs, Jacksonville, FL
We
audited the Cathedral Foundation of Jacksonville, Inc. (Foundation),
concerning its involvement as owner and/or manager of four elderly
multifamily housing projects (projects) located in Jacksonville,
Florida. We conducted the audit based on a request from the Jacksonville
Multifamily Housing Hub, U.S. Department of Housing and Urban Development
(HUD), Jacksonville, Florida. Our audit objective was to determine
whether the Foundation operated the four projects in accordance
with HUD's regulatory agreements and other applicable laws, regulations,
and requirements.
The
Foundation used more than $2.65 million in project funds for questioned
costs while the projects had no surplus cash and without required
HUD approval. The questioned amount included $1.35 million, which
the Foundation repaid itself without HUD approval for project advances
and $1.30 million for questioned costs for salaries, fringe benefits,
janitorial services, retirement plan, parking fees, and other costs.
The questioned costs violated federal statutes, regulations, contracts,
and other HUD requirements. The
Foundation and subsidized project owners also collected $93,677
in prohibited parking fees from tenants. The prohibited parking
fees placed an unjustified financial burden on the tenants. The
violations occurred because the Foundation and project owners did
not follow HUD's and other requirements.
We
recommend that the director of HUD's Jacksonville Multifamily Housing
Hub require the Foundation and project owners to deposit to the
project's residual receipt accounts more than $2.5 million for ineligible,
unreasonable, or unnecessary costs and repay any portion of the
$147,277 in unsupported costs that it cannot document as reasonable
and necessary costs for the projects. We further recommend that
the director require the Foundation and the owners of the projects
to reimburse $93,677 to tenants who paid prohibited parking fees.
We also recommend that the director of the Departmental Enforcement
Center, in coordination with the director of the Multifamily Division,
Jacksonville Hub, take appropriate administrative action against
the Foundation and project owners for
not complying with requirements.
Issue
Date: September 15, 2006
Audit
Report No.: 2006-AT-1020
File Size: 120kb
Title:
The Jacksonville, Florida Housing Authority's Section 8 Units Met
HUD Housing Quality Standards
We conducted
an audit survey of the Jacksonville Housing Authority's (Authority)
Section 8 Housing Choice Voucher program as part of the U.S. Department
of Housing and Urban Development (HUD), Office of the Inspector
General's (OIG) annual audit plan. We selected the Authority for
review based on a Section 8 risk assessment we conducted. Our objectives
were to determine whether the Authority made Section 8 subsidy payments
only for units that met housing quality standards and whether the
program warranted a full audit.
Our
inspection of 18 Section 8 units found that five did not meet minimum
housing quality standards, two of which were in material noncompliance.
The low error rate did not warrant proceeding from the survey to
a full audit of the program.
The
Authority agreed with our inspection results. It notified the owners
of the inspection results and requested that they correct the violations.
The Authority has also agreed to re-inspect the units to ensure
the violations have been corrected. Thus, the report contains no
finding, and no further action is necessary.
Issue Date: July 28, 2006
Audit
Report No.: 2006-1018
File Size: 93.26
Title: Taylor, Bean and Whitaker, Inc., Ocala, Florida, Met Temporary
Interest Rate Buydown Requirements
We audited Taylor, Bean and Whitaker, Inc. (auditee), in Ocala,
Florida, because of the number of temporary interest rate buydown
(buydown) loans it underwrote that went into default. Our objective
was to determine whether the auditee followed U.S. Department of
Housing and Urban Development (HUD) regulations, procedures, and
instructions when it assessed borrowers' eligibility for loans it
underwrote that involved buydowns.
We identified no instances in which borrowers did not qualify for
the buydowns the auditee approved. In most instances, the auditee
did not document its assessment of the borrowers' eligibility for
the buydowns. However, lenders are no longer permitted to qualify
borrowers using buydown mortgage payment amounts. Accordingly, there
is no need for action to address the auditee's failure to properly
document its assessment of borrowers' eligibility for the buydowns.
This report contains no finding.
Issue Date: July 26, 2006
Audit
Report No.: 2006-AT-1014
File Size: 214.67
Title: The State of Florida Lacked Adequate Procedures to Prevent
Possible Duplicate Disaster Recovery Benefits to Recipients
We audited the 2004 Community Development Block Grant disaster
recovery funds provided to the State of Florida (State). We selected
this grant for review based on risk factors associated with fraud,
waste and abuse. Our audit objectives were to determine whether
the State (1) awarded and disbursed disaster recovery funds in accordance
with HUD requirements and (2) implemented adequate procedures for
monitoring the projects financed by the disaster recovery funds.
The State awarded and disbursed the 2004 Community Development
Block Grant disaster recovery funds in accordance with HUD requirements.
However, program files lacked evidence that the State verified whether
recipients used disaster recovery funds for activities reimbursed
by the Federal Emergency Management Agency, Small Business Administration,
or other sources. This occurred because the State did not have adequate
procedures to prevent possible duplicate disaster recovery payments
to recipients. As a result, the opportunity existed for a recipient
to receive funding for the same activity from several sources.
We recommend that HUD require the State to develop and implement
procedures to ensure that Community Development Block Grant disaster
recovery funds will not be used for activities reimbursed by the
Federal Emergency Management Agency, Small Business Administration,
or any other program or source and maintain supporting documentation
in its files.
Issue
Date: June 28, 2006
Audit
Report No.: 2006-AT-1012
File Size: 1.33MB
Title:
The Miami Dade Housing Agency, Miami, Florida, Paid Housing Choice
Voucher Program Funds for Some Overhoused Tenants
We completed
an audit of the Miami Dade Housing Agency's (Agency) Section 8 Housing
Choice Voucher program. Our audit objective was to determine whether
it paid excess subsidies for overhoused tenants.
The
Agency overhoused 17 tenants and unnecessarily paid $61,862 in excess
subsidies on behalf of 13 of these tenants. In addition, the Agency
has 228 tenants who could be overhoused with the potential to incur
excess subsidy payments. The Agency does not have adequate procedures
to ensure that tenants receive the proper voucher size. By improving
its procedures, the Agency could avoid future losses of $81,828,
which would allow it to provide vouchers to additional tenants.
Our
recommendations include requiring the Agency to (1) submit a corrective
action plan to correct the 17 overhoused tenant vouchers; (2) reimburse
its program $61,862 in non-federal funds; (3) submit a time schedule
to review the additional 228 tenants for overhousing, a corrective
action plan to correct any overhoused tenant vouchers, and reimburse
its program in non-federal funds; and (4) develop and implement
procedures to ensure that tenants receive the proper voucher size
to avoid future losses of $81,828.
Issue Date: May 31, 2006
Audit
Report No.: 2006-AT-1010
File Size: 1.77MB
Title: The Orlando Housing Authority Did Not Ensure That All Section
8 Units Met Housing Quality Standards and Paid Excessive Subsidies
for Some Units
We audited the Orlando FL Housing Authority's (Authority) Section
8 Housing Choice Voucher program. Our audit objective was to determine
whether the Authority made Section 8 subsidy payments only for units
that met housing quality standards and whether subsidy payments
were limited to the amount allowed for the unit size authorized
by each family's composition.
Our inspection of a statistical sample of 67 Section 8 units found
that 20 did not meet standards of which 8 units were in material
noncompliance. This condition occurred because the Authority's inspectors
did not identify the unit deficiencies during their inspections
or identified the conditions but did not report the units as being
in noncompliance. As a result, the Authority paid $31,474 in ineligible
subsidies for the 8 units, and we estimate the Authority will pay
housing assistance payments of more than $1.14 million for units
in material noncompliance with housing quality standards. In addition,
the Authority paid $10,393 in excess housing assistance payments
for 5 of 22 tenants housed in units larger than justified by the
families' composition. The improper voucher size occurred because
the Authority did not always follow requirements to ensure that
tenants are only issued Section 8 vouchers for the unit size authorized
by their family composition.
We recommend that the director of the Office of Public Housing
require the Authority to abate Section 8 subsidies or terminate
HAP contracts on all units that do not meet standards if the violations
detected by our inspections are not corrected in a timely manner.
The director should also require the Authority to improve its controls
over the inspection process to ensure that inspectors properly identify
and report all housing quality standards violations in the units
they inspect to prevent more than $1.14 million from being spent
on units with material housing quality standards violations. We
further recommend that the director require the Authority to repay
$31,474 from nonfederal funds for ineligible housing assistance
payments it made for the eight units with material violations.
We also recommend that the director of the Office of Public Housing
require the Authority to reimburse its program from nonfederal funds
$10,393 for excess housing assistance payments for five overhoused
tenants plus any additional amount paid until corrective action
is taken. The director should also require the Authority to establish
controls to ensure initial determination of the correct voucher
size and to adjust tenant vouchers in a timely manner to reflect
reported changes in family composition. The director should require
the Authority to issue the correct size voucher to overhoused tenants
and ensure their subsidy amounts are properly calculated.
ssue Date: January 12, 2006
Audit
Report No.: 2006-AT-1003
File Size: 2273KB
Title: Certified Home Loans of Florida, Miami, Florida Did Not
Always Comply with Federal Housing Administration Requirements
We audited Certified Home Loans of Florida (Certified) in Miami,
FL. Certified is a non-supervised direct endorsement lender approved
by the U.S. Department of Housing and Urban Development (HUD) to
originate and underwrite Federal Housing Administration-insured
single-family mortgages. We selected Certified for review because
of risk factors associated with defaulted loans.
The audit objectives were to determine whether Certified: (1) complied
with HUD regulations, procedures, and instructions in the origination
and underwriting of Federal Housing Administration-insured single-family
mortgages, and (2) implemented its quality control plan as required.
Certified did not follow HUD requirements when underwriting 14 Federal
Housing Administration-insured loans totaling $1,885,734. Fourteen
of the 17 loans we reviewed had problems. These loans contained
deficiencies that affected the insurability of the loans. Certified
approved the loans based on inaccurate employment, income, and gift
information and other deficiencies. This occurred because Certified
did not exercise due care in originating and underwriting loans,
primarily by not clarifying inconsistencies in the loan files or
adequately following up to verify borrower income and employment
histories.
Certified did not fully implement its quality control plan. Certified
did not conduct the required number of quality control reviews,
including early defaulted loans and rejected loan applications,
nor ensure that quality control reviews were performed within 90
days of closing. Certified's quality control plan was also incomplete,
as it did not include all required elements as prescribed by HUD.
We attribute these deficiencies to Certified's disregard of HUD
requirements and instructions and reliance on an independent contractor
to fulfill its responsibilities. As a result, HUD has no assurance
of the accuracy, validity, and completeness of Certified's loan
origination and underwriting operations.
We recommend that the Assistant Secretary for Housing-Federal Housing
Commissioner require Certified to: (1) indemnify HUD against future
losses on four loans totaling $660,699, and (2) reimburse HUD for
a loss, if applicable, of $728,479 for claims paid for five loans.
We further recommend that HUD take appropriate measures to ensure
that Certified conducts required quality control reviews and the
written quality control plan complies with HUD requirements. Finally,
we recommend that HUD take administrative action, as appropriate,
up to and including civil monetary penalties.
Issue Date: December 21, 2005
Audit
Report No.:2006-AT-1001
File Size: 884.21KB
Title: The Miami Dade Housing Agency, Miami, Florida
Did Not Ensure Section 8-Assisted Units Met Housing Quality Standards
We completed an audit of the Miami Dade Housing Agency's (Agency)
Section 8 Housing Choice Voucher program. Our audit objective was
to determine whether Section 8-assisted units met housing quality
standards in accordance with HUD requirements.
Our statistical sample of 120 Section 8 units found that 117 units
did not meet minimum housing quality standards. Of the 117 units,
38 had significant housing quality standards violations. Projecting
the results of the statistical sample to the population indicates
at least 12,387 of the Agency's 13,220 units did not meet minimum
housing quality standards. Further, 3,265 units had significant
housing quality standards violations. This occurred because Agency
management did not place sufficient emphasis on housing quality
standards requirements and did not implement adequate internal controls.
As a result, tenants lived in units that were not decent, safe,
and sanitary, and HUD made housing assistance payments for units
that did not meet standards.
Our recommendations include requiring the Agency to inspect all
of the 117 Section 8 housing choice voucher-assisted units to verify
that corrective actions were taken by the landlord and if not, to
abate the rents or terminate the tenants' vouchers. The Agency should
also develop and implement an internal control plan and incorporate
it into the Agency's Section 8 administrative plan to ensure units
meet housing quality standards and inspections meet HUD requirements
to prevent an estimated $25.9 million from being spent on units
with significant violations. Further, HUD should reduce or offset
$7,300 of the Agency's administrative fees for the 38 units with
significant housing quality standards violations.
Issue Date: September 29, 2005
Audit
Memorandum No.: 2005-AT-1804
File Size: 44.07KB
Title: American Financial Network, Boca Raton, Florida
We performed an audit survey of American Financial Network (American
Financial), operating from its home office in Boca Raton, Florida.
American Financial is a nonsupervised direct endorsement lender
approved by the United States Department of Housing and Urban Development
(HUD) to originate Federal Housing Administration-insured single-family
mortgages. We selected American Financial due to its high default
rate. American Financial's primary underwriter had a 314 percent
compare ratio and a 15.26 percent default rate for loans with beginning
amortization dates between September 1, 2003, and August 31, 2005.
We learned that the Quality Assurance Division conducted a review
of one of American Financial's primary loan correspondents. It is
still performing analysis and verification work on the loans selected
for review. Therefore, we decided to suspend further work to avoid
duplication.
Issue Date: March 25, 2005
Audit
Report No.: 2005-AT-1008
File Size: 1.14MB
Title: Trust America Mortgage, Inc. Non-Supervised Direct Endorsement
Lender Cape Coral, Florida
We audited Trust America Mortgage, Inc. (Trust America) in Cape
Coral, FL. Trust America is a non-supervised direct endorsement
lender approved to originate FHA single-family mortgages. We selected
Trust America for review because of risk factors associated with
defaulted loans. Our objectives were to determine whether Trust
America complied with HUD regulations, procedures, and instructions
in the origination and underwriting of Federal Housing Administration-insured
single-family mortgages, and implemented its quality control plan
as required.
Trust America did not follow HUD requirements when originating
and approving 16 Federal Housing Administration-insured loans totaling
$1,949,079. Sixteen of the seventeen loans we reviewed had problems.
All 16 loans contained underwriting deficiencies that, taken as
a whole, should have led a prudent lender to not approve the loan.
Trust America approved the loans based on inadequate asset and debt
verification and other deficiencies. The deficiencies occurred because
Trust America failed to exercise due care in originating and underwriting
loans, primarily by not clarifying inconsistencies in the loan files.
These deficiencies increased HUD's risk to the Federal Housing Administration
insurance fund.
Trust America did not fully implement its quality control plan.
Trust America did not conduct the required number of quality control
reviews, including reviews of early defaulted loans and rejected
loan applications. Trust America's quality control plan was also
incomplete, as it did not include all required elements as prescribed
by HUD. We attribute these deficiencies to Trust America's disregard
of HUD requirements and instructions and reliance on an independent
contractor to fulfill its responsibilities. As a result, HUD has
limited assurance of the accuracy, validity, and completeness of
Trust America's loan origination and underwriting operations.
We recommend that the Assistant Secretary for Housing-Federal Housing
Commissioner require Trust America to indemnify HUD against future
losses on eight loans totaling $977,709, reimburse HUD for a loss
already incurred of $17,502 on one property, and reimburse HUD for
a loss, if applicable, on another property for which HUD paid a
claim of $113,002. We further recommend that HUD take appropriate
measures to ensure Trust America conducts required quality control
reviews and the written quality control plan complies with HUD requirements.
Finally, we recommend that HUD take administrative action, as appropriate,
up to and including civil monetary penalties.
Issue Date: March 15, 2005
Audit
Report No.: 2005-AT-1007
File Size: 1.14MB
Title: Interstate Financial Mortgage Group Corporation Non-Supervised
Direct Endorsement Lender Miami, Florida
We audited Interstate Financial Mortgage Group Corporation (Interstate)
of Miami, FL, a non-supervised direct endorsement lender approved
to originate FHA single-family mortgages. We selected Interstate
for review because of risk factors associated with defaulted loans.
Our objectives were to determine whether Interstate complied with
HUD regulations, procedures, and instructions in the origination
and underwriting of FHA-insured single-family mortgages, and implemented
its quality control plan as required.
Interstate did not follow HUD requirements when originating and
approving 15 FHA-insured loans totaling $1,599,281. Fifteen of the
18 loans we reviewed had problems. Interstate approved the loans
based on inaccurate employment, income and gift documentation, and
other deficiencies. This occurred because Interstate did not exercise
due care in originating and underwriting loans, primarily by not
clarifying inconsistencies in the loan files or adequately following
up to verify borrower income and employment histories. Interstate
also improperly allowed independent loan officers to originate loans
and maintained no supporting documentation to ensure HUD that interest
rates, loan discount points, and other fees were appropriately charged.
These deficiencies increased HUD's risk to the Federal Housing Administration
insurance fund.
Interstate did not fully implement its quality control plan. Interstate
did not conduct the required number of quality control reviews,
including early defaulted loans and rejected loan applications,
nor ensure that immediate corrective action was taken when deficiencies
were identified by its contractor. Interstate's quality control
plan was also incomplete, as it did not include all required elements.
We attribute these deficiencies to Interstate's disregard of HUD
requirements and instructions. As a result, HUD has no assurance
of the accuracy, validity, and completeness of Interstate's loan
origination and underwriting operations.
We recommend that the Assistant Secretary for Housing-Federal Housing
Commissioner require Interstate to indemnify HUD against future
losses on 10 loans totaling $1,057,905, reimburse HUD for a loss
already incurred of $36,951 on one property, and reimburse HUD for
a loss, if applicable, on another property for which HUD paid a
claim of $110,866. We recommend that HUD require Interstate to stop
using independent loan officers to originate FHA loans and maintain
documentation to justify interest rates, loan discount points, or
other fees charged. We further recommend that HUD take appropriate
measures to ensure that Interstate conducts required quality control
reviews, corrective action is taken and documented for all reported
deficiencies, and the written quality control plan complies with
HUD requirements. Finally, we recommend that HUD take administrative
action, as appropriate, up to and including civil monetary penalties.
Issue Date: August 19, 2004
Audit
Report No. 2004-AT-1014
File Size: 346.5KB
Title: West Palm Beach Housing Authority West Palm Beach, Florida
The Authority improperly encumbered low-income housing properties
as collateral for a $3 million line of credit. In addition, the
Authority used $150,000 in capital funds to defray expenses associated
with housing development activities without HUD approval. Therefore,
low-income housing assets were unnecessarily put at risk, and capital
funds were used in violation of HUD requirements. We believe these
actions occurred because the Authority had not established adequate
controls to monitor transactions and ensure that they met with HUD
requirements.
Issue Date: August 19, 2004
Audit
Report No. 2004-AT-1013
File Size: 1.76MB
Title: Housing Authority of the City of Lakeland, Lakeland, Florida
We found the Authority paid at least $296,140 for ineligible expenses
that were not authorized under its Housing Opportunities for People
Everywhere (HOPE VI) Grant. This included $270,437 for legal fees
and $25,703 for financial consultant fees. Also, the Authority failed
to obtain timely repayment of $990,169 it advanced to the lead developer,
The Communities Group (TCG). As of December 31, 2003, TCG still
owed the Authority $704,542, which is at risk of nonpayment. On
January 23, 2004, the Authority issued a Notice of Default to TCG
for failure to adequately perform. The Authority assumed the role
of lead developer for the remaining phases. However, the Authority
has not demonstrated the capacity to serve as lead developer. Thus,
we question whether the Authority has the capacity to complete its
HOPE VI Revitalization Plan. Also, the Authority and TCG are currently
involved in legal disputes that could affect completion of the remaining
phases. We are also concerned as to whether sufficient funds remain
to complete all the remaining phases and whether they can be completed
timely. Accordingly, successful completion of the remaining phases
of the Revitalization Plan and the remaining $7.6 million of Grant
funds are at risk.
These actions occurred because the Authority did not have adequate
controls to ensure Grant funds were spent only for eligible activities,
the Authority did not timely enforce the terms of its Pre-Development
Agreement with TCG, and because TCG failed to fulfill its responsibilities
as specified in the Master Project Development Agreement, Pre?Development
Agreement, and Lead Developer Agreement.
Issue Date: June 17, 2004
Audit
Report No.: 2004-AT-1010
File Size: 1.98MB
Title: First Community Mortgage, Inc., Non-Supervised Loan Correspondent,
Ft Myers, FL
The officer/owners of First Community Mortgage, Inc. (FCM) effectively
circumvented its suspension by HUD by creating two new mortgage
companies and obtaining HUD approval for them to originate loans.
FCM officers and employees were named as officers and employees
of the two new companies while still working for FCM. The new entities
also used FCM's office address.
FCM did not comply with HUD requirements in its origination of
FHA-insured loans. In 18 of the 19 loans we reviewed, FCM staff
did not obtain complete documentation, made improper income determinations,
or did not ensure compliance with other HUD standards.
FCM did not implement the Quality Control (QC) Plan it submitted
to HUD, and its QC processes did not comply with HUD regulations.
The QC Plan did not address key elements including: (1) documenting
corrective actions taken on QC results, (2) reporting significant
discrepancies to HUD, (3) timely performance of QC reviews, and
(4) QC review of rejected loans. FCM's actual QC performance was
materially deficient.
We recommended that HUD suspend FCM's authority, and the two new
mortgage companies authority, to originate and underwrite FHA loans.
We also recommend that the Departmental Enforcement Center debar
FCM's principals from further participation in HUD and other Federal
programs and consider imposing civil money penalties.
Issue Date: May 4, 2004
Audit
Memorandum No.: 2004-AT-1804
File Size: 143.4KB
Title: Audit Survey of Miami Dade Housing Agency, Miami-Dade County,
Florida
We completed an audit survey of the Miami Dade Housing Agency's
(Agency) administration of its housing development activities. We
performed the review as part of an audit of the Department of Housing
and Urban Development's (HUD) oversight of Public Housing Agency
activities with related nonprofit entities. Our objective was to
determine whether the Agency diverted or pledged resources subject
to an Annual Contributions Contract (ACC) or other agreement or
regulation to the benefit of other entities without specific HUD
approval. We did not identify any deficiencies. Accordingly, we
will not expand the survey into the audit phase.
Issue Date: March 19, 2004
Audit
Report No.: 2004-AT-1003
File Size: 386.5KB
Title: Housing Authority of the City of Fort Lauderdale
Fort Lauderdale, Florida
The Authority violated its ACC with HUD by inappropriately pledging
assets and advancing funds for some of its activities. Management
inappropriately pledged assets of $452,000 in low-income housing
(LIH) funds to assure the rehabilitation and purchase of two non-federal
development activities. Management also inappropriately advanced
$151,297 in LIH funds to support various programs. The Authority
used $127,669 to purchase inventory materials or insurance for seven
programs/activities, and $23,628 to support the activities of an
affiliated nonprofit. On December 5, 2003, the Authority reimbursed
all but $81,722. Furthermore, the Authority did not have a proper
cost allocation plan to support the allocation of $11,404 to the
Section 8 Program and $86,324 of indirect costs to the LIH and Section
8 funds. We believe these actions occurred because the Authority
had not established adequate controls to monitor and ensure its
transactions adhered to HUD requirements.
Issue Date: March 9, 2004
Audit
Memorandum No.: 2004-AT-1803
File Size: 146.6KB
Title: Jacksonville Housing Authority
Jacksonville, Florida
We completed a review of the Jacksonville Housing Authority's (Authority)
administration of its housing development activities. We performed
the review as part of an audit of the Department of Housing and
Urban Development's (HUD) oversight of Public Housing Agency activities
with related nonprofit entities. Our objective was to determine
whether the Authority diverted or pledged resources subject to an
Annual Contributions Contract or other agreement or regulation to
the benefit of other entities without specific HUD approval. We
did not identify any deficiencies. Accordingly, our report did not
contain any reportable conditions or recommendations for corrective
action.
Issue Date: February 18, 2004
Audit
Memorandum No.: 2004-AT-1801
File Size: 145.7KB
Title: Hialeah Housing Authority
Hialeah, Florida
We completed a review of the Hialeah Housing Authority's (Authority)
administration of its housing development activities. We performed
the review as part of an audit of the Department of Housing and
Urban Development's (HUD) oversight of Public Housing Agency activities
with related nonprofit entities. Our objective was to determine
whether housing development activities involving the Authority and
any related entities were carried out in accordance with Federal
requirements. We determined the Authority's housing development
activities were carried out in accordance with Federal requirements.
Our report did not contain any reportable conditions or recommendations
for corrective action.
Issue
Date: January 31, 2003
Audit
Memorandum No.: 2003-AT-1803
File Size: 501KB
Title: Fort Pierce Housing Authority Fort Pierce, Florida
The
FPHA's system of accounting and management controls was weak. FPHA
lacked controls to assure that it adhered to HUD and its own policies
and procedures concerning cash disbursements, credit card and travel
expenditures, procurement activities, purchases, and equipment inventory.
As a result, HUD and the FPHA lacked assurance that its assets were
properly safeguarded against waste, loss, and misuse. The FPHA did
not adhere to HUD requirements designed to prevent conflicts of
interest, assure the reasonableness of Section 8 rents, obtain third
party verification of program participant's income, and calculate
rent correctly. In addition, the FPHA used Section 8 reserve funds
without Board of Commissioners approval as required by FPHA procedures.
These weaknesses occurred because the FPHA had not established adequate
or effective controls to administer the program. As a result, the
FPHA could not ensure (1) limited resources of its Section 8 Program
were used efficiently; (2) HUD subsidized reasonable Section 8 rents;
and (3) program participants were treated fairly and equitable.
The FPHA agreed with our findings and indicated they have or will
take a number of corrective actions to address the findings.
Issue Date: January 16, 2003
Audit
Memorandum No.: 2003-AT-1802
File Size: 410KB
Title: Housing Authority of the City Of Key
West Key West, Florida
The KWHA's procurement activities needed improvement. Management
did not ensure that procurement activities complied with the Department
of Housing and Urban Development (HUD) or local procurement policies
and procedures. Our review found that: (1) cost estimates and cost/price
analyses were not conducted, (2) the contract register was inaccurate,
(3) records lacked sufficient documentation of procurement histories,
and (4) contracts had conflict of interest relationships. These
deficiencies occurred because there was no clear responsibility
for the management, oversight, and review of procurement activities.
The KWHA needed to improve the administration of its Section 8
Program. Specifically, KWHA: (1) did not recognize conflict of interest
situations, (2) did not establish reasonable contract rents and
incorrectly calculated Housing Assistance Program (HAP) payments
to landlords, and (3) did not conduct proper Housing Quality Standards
(HQS) inspections. These weaknesses occurred because the KWHA staff
lacked knowledge of HUD requirements and had not established adequate
or effective controls to administer the program.
The KWHA agreed with our findings and indicated they have or will
take a number of corrective actions to address the findings.
Issue Date: September 27, 2002
Audit
Memorandum No.: 2002-AT-1809
File Size: 74KB
Title: Congressionally Requested Audit of the Outreach and Technical
Assistance Grants and Intermediary Technical Assistance Grants awarded
to the Florida Housing Coalition, Inc. Tallahassee, Florida
We completed an audit of the two Outreach and Technical Assistance
Grants and four Intermediary Technical Assistance Grants awarded
to Federal Housing Coalition, Inc. (Grantee). The overall objective
of the review was to determine if the Grantee used Section 514 grant
funds for only eligible activities as identified in the grant agreements
and HUD requirements. We did not identify any ineligible lobbying
activities. The Grantee used the OTAG and ITAG funds for only eligible
activities and maintained accounting system records and documentation
that complied with OMB Circulars A-122 and A-110. We found no material
reportable conditions.
Issue Date: September 26, 2002
Audit
Report No.: 2002-AT-1004
File Size: 79KB
Title: Ashley Crossings Apartment Homes -HUD Project No. 067-35331
Largo, Florida
At HUD's request, we conducted an audit of Ashley Crossings Apartment
Homes. We reviewed project operations, construction activities,
and procedures relating to the application, Firm Commitment, and
Initial Closing on the project. Specifically, the audit objectives
were to determine (1) what transpired up to and during the initial
closing, (2) if the owner used project operating and trust funds
in compliance with the Regulatory Agreement and HUD requirements
specifically related to the distributions of earnings, and (3) whether
improper construction activities occurred during the project's rehabilitation
period. We found no irregularities related to the construction activities.
The owner improperly disbursed $312,439 in project operating and
trust funds, while defaulting under the Regulatory Agreement and
while providing HUD with inaccurate and incomplete information on
monthly accounting reports. The ineligible disbursements consisted
of $200,330 for unauthorized distributions, including $25,000 disbursed
after the mortgage default, and $112,109 for ineligible management
agent expenditures. The misuse of funds contributed to the mortgage
default and HUD's recommendation to foreclose on the mortgage.
The owner improperly used $12,039 of tenant security deposits.
As a result, project liabilities to tenants were not funded in a
trust account as prescribed by HUD regulations. The owner also deposited
tenant security deposits into the operating account initially and
paid security deposit refunds from the operating account recently.
The owner failed to fully disclose all facts concerning the Ashley
Crossings Project and mortgagor entity, and diverted mortgagor entity
assets that could have been used for the project. HUD processed
the loan application and approved the loan without full knowledge
of all the relevant facts surrounding the acquisition of the property.
Had HUD been aware of all the facts, the loan may not have been
approved. As a result, the $12,989,900 HUD insured loan went into
default, was assigned to HUD, and was recommended for foreclosure.
Subsequent to the foreclosure recommendation, HUD decided to dispose
of the mortgage in a note sale. The FHA Insurance Fund stands to
suffer a substantial loss when the mortgage note is sold as a result
of the assignment.
We attributed the conditions to the owner's failure to follow
HUD requirements.
In response to the draft findings, the Atlanta Enforcement Center
agreed to be responsible for implementing the draft report recommendations.
The Atlanta Enforcement Center agreed to require repayment of ineligible
distributions and ineligible management agent expenditures. The
Center also agreed to pursue debarment action against the mortgagor
entity and its individual principals.
Issue Date: October 30, 2001
Audit
Memorandum No.: 2002-AT-1801
File Size: 138KB
Title: Hotline Complaint - West Palm Beach Housing Authority
The objective of our audit survey was to determine whether a hotline
complaint alleging mismanagement of procurements resulting in inflated
project costs, and the existence of a conflict of interest was valid.
To accomplish our objective, we reviewed Department of Housing and
Urban Development (HUD) and WPBHA policies and procedures, reviewed
housing authority Comprehensive Grant Program (CGP) records, interviewed
program officials at HUD and the WPBHA, and reviewed eight procurement
or contract files including two contracts identified by the complainant.
Our review did not substantiate the allegations of procurement
mismanagement and inflated costs, nor did we substantiate a conflict
of interest. However, we found that WPBHA did not follow its written
procurement policy and the policy in use was not the same procurement
policy submitted to HUD after a 1997 monitoring review. We noted
that the procurement policy did not require three price quotes for
procurements up to $2000 and did not adequately address the use
of purchase orders versus contracts. Contract files were also incomplete.
HUD Office of Public Housing should review WPBHA's written procurement
policy and determine if changes are warranted. WPBHA should comply
with its written procurement policy and establish controls to ensure
that contract/procurement files are complete.
Issue Date: September 27, 2001
Audit
Memorandum No.: 2001-AT-1808
File Size: 453KB
Title: Autographed Book Give-Away for Inner City Youths, Inc.,
Orlando, FL, Nonprofit Participation in FHA Single Family Insurance
Program
As part of a nationwide audit of the Federal Housing Administration's
(FHA) Single Family Insurance Program, we audited Autographed Book
Give-Away for Inner-City Youths, Inc.'s (ABG) purchase of Real Estate
Owned (REO) properties. Our objectives were to determine whether
ABG was legitimate and independent (not under the influence, control,
or direction of other parties) and passed on the benefits of discounts
received on the purchase of HUD homes to low- and moderate-income
homebuyers.
ABG did not properly control and manage its affordable housing
program. ABG allowed venture partners to influence and control most
of the properties purchased from HUD. The arrangement created a
conflict of interest and defeated HUD's objective of increasing
opportunities for affordable homeownership to low and moderate-income
persons. ABG sold homes to ineligible purchasers, sold homes at
excessive prices, allowed properties to be sold at predatory loan
rates, failed to maintain adequate accounting records, and needed
to improve the quality of its renovation work. In addition to its
failure to meet HUD's program objectives, we question ABG's charitable
intent. The Executive Director used the non-profit to pay personal
expenses of $97,351. Use of a nonprofit for personal benefit violates
HUD's eligibility criteria for participation in its programs. We
recommend HUD require ABG to reimburse HUD $23,225 for the discounts
it received on the three properties it sold to unqualified buyers,
and pay down the mortgages for the 30 percent discounted properties
sold in excess of 110 percent of net development cost.
We also recommend ABG assist homebuyers with exorbitant mortgage
rates (over 17 percent) to obtain refinancing at reasonable prevailing
rates, and correct or pay for rehabilitation deficiencies identified
by our audit.
Issue Date: September 24, 2001
Audit
Memorandum No.: 2001-AT-1806
File Size: 969KB
Title: the Rain Foundation, Titusville, FL, Nonprofit Participation
in FHA Single Family Insurance Program
As part of a nationwide audit of the Federal Housing Administration's
(FHA) Single Family Insurance Program, we audited The Rain Foundation's
(Rain) purchase of Real Estate Owned (REO) properties. Our objectives
were to determine whether Rain was legitimate and independent (not
under the influence, control, or direction of other parties) and
passed on the benefits of discounts received on the purchase of
HUD homes to low and moderate-income homebuyers.
We concluded that Rain was not independent and did not pass on
benefits of discounts it received from HUD. Rain allowed a consultant
and venture partners to influence and control most of the properties
purchased from HUD. The arrangement created a conflict of interest
and defeated HUD's objective of increasing opportunities for affordable
homeownership to low and moderate-income persons. Rain and/or the
venture partners received excessive profits from the resale of the
properties. For the 6 properties we reviewed, Rain received discounts
of $45,593 from HUD. However, it discounted them a total of only
$7,750 below fair market value, while turning a profit for itself
and its partners of $65,035. Also, Rain sold two properties to ineligible
buyers, was unable to properly account for property repairs, and
submitted inaccurate information to HUD during its re-certification
process.
During our audit, HUD issued a 1-year removal action against Rain
with an effective date of November 15, 2000. HUD found similar problems
including use of joint venture agreements, conflicts of interest,
and failure to pass on discounts to homeowners. We believe HUD's
action was appropriate. Since HUD has removed Rain from the program,
we are making no further recommendations for corrective action.
Issue Date: December 8, 2000
Audit
Report No.: 01-AT-251-1004
File Size: 923KB
Title: Palm Beach County Division of Human Services Supportive
Housing Grant, West Palm Beach, Florida
As part of a nationwide audit of HUD's Continuum of Care Program,
we audited the 1996 Supportive Housing Grant awarded to Palm Beach
County Division of Human Services (County).
We determined the County implemented activities consistent with
its application, spent funds for eligible activities, and properly
leveraged funding. However, the County needed to improve its administration
of the program. Specifically, the audit disclosed:
- A service provider had zoning problems and was unable to obtain
site control within the 1-year period or timely provide transitional
housing at the agreed location. As a result, the County did not
provide the full level of housing units. Also, the delay may cause
the County to be unable to spend the grant funds within the 3-year
period. Furthermore, the County did not disclose the change in
site location or obtain HUD approval for the change.
- The County misclassified operating and supportive services
costs totaling $285,717. As a result, the County incorrectly used
about $32,103 of grant funds to pay for its share of the costs.
- The County did not submit accurate program progress and financial
information. Also, the County did not maintain adequate evidence
of measurable results. As a result, the County and HUD lacked
information to determine whether the grant activities were providing
intended results.
- The County did not follow required Federal procurement procedures
in awarding contracts in excess of $1.1 million. County officials
did not believe the Federal requirements were applicable. Therefore,
the County entered into contracts with service providers to provide
transitional housing and supportive services without competition
or a cost/price analysis. As a result, the County and HUD have
no assurance the costs for transitional housing and supportive
services obtained under these contracts were reasonable and obtained
at the best price.
The audit recommended that HUD instruct the County to improve its
controls over the program and that HUD monitor any ongoing or future
grants.
Issue Date: November 3, 2000
Audit
Report No.: 01-AT-251-1002
File Size: 234KB
Title: Adopt-A-Family of the Palm Beaches, Inc.Supportive Housing
Grant, West Palm Beach, Florida
As part of a nationwide audit of HUD's Continuum of Care Program,
we audited the 1996 Supportive Housing Grant awarded to Adopt-A-Family
of the Palm Beaches, Inc (AAF). The audit objectives were to determine
whether AAF:
- Implemented activities consistent with its application;
- Spent funds for eligible activities under Federal regulations
and applicable cost principles;
- Maintained evidence of measurable results;
- Adequately leveraged funding; and
- Spent funds timely.
We determined AAF implemented activities consistent with its applications,
adequately leveraged funding, and timely spent grant funds for eligible
activities. However, AAF needed to improve its administration of
the program. Specifically, the audit disclosed AAF did not:
- Follow Federal procurement requirements when awarding a professional
counseling services contract. Instead, AAF contracted solely with
a coalition partner. As a result, AAF and HUD had no assurance
that the best service and price were obtained. Furthermore, AAF
did not obtain adequate supporting documentation for counseling
services expenditures. As a result, grant expenditures totaling
$88,741 were unsupported.
- Provide the agreed level of service for transitional housing.
AAF chose to vacate and renovate available units during the grant
period. During December 1999, only 15 of the agreed 32 units were
available to house homeless families. AAF's withdrawal of the
units resulted in a significant reduction in the level of service
that violated HUD requirements.
- Provide accurate or complete information in its annual performance
reports. AAF did not monitor one goal and underreported other
goals. As a result, HUD lacked information to determine whether
the grant activities were achieving intended results.
We recommend that you instruct AAF to improve its controls over
the program and that you monitor any ongoing or future grants.
We presented our findings to AAF and HUD officials during the audit,
and held an exit conference on September 20, 2000. AAF provided
written comments to our findings on October 3, 2000. We considered
the comments and suggestions in preparing our final report. We included
excerpts of AAF's comments in each finding and the complete comments
as Appendix B.
Issue Date: October 20, 2000
Audit
Report No.: 01-AT-202-1001
File Size: 521KB
Title: Housing Authority of the City of Miami Beach, Miami Beach,
Florida
We conducted the audit in response to a request by the Department
of Housing and Urban Development (HUD), Office of Public Housing.
We reviewed selected aspects of the HACMB's Section 8 and public
housing operations. Our primary objectives were to determine if
the HACMB complied with HUD and/or State of Florida requirements
for: (1) Section 8 expenditures for inter-local projects with the
City of Miami Beach (City); (2) Section 8 expenditures for construction
of a single parent family housing and resource center; (3) Section
8 rent reasonableness and rent increases; and (4) procurement and
general disbursements of public housing funds.
The audit disclosed violations of HUD requirements with regard
to each audit objective and over $1 million in questioned costs
and $9,267 ineligible costs. These conditions resulted from the
HACMB's mismanagement of its Section 8 and public housing programs
and its financial affairs. Specifically, the HACMB:
- Spent $795,178 of its Section 8 reserves for questionable activities
provided through contracts with the City. The HACMB paid the City
for police protection, recreation, and code enforcement. We questioned
the reasonableness and necessity of the $795,178 paid for police
protection, code enforcement and recreation. The costs were for
public services the City should have provided from its local tax
revenues.
- Spent over $2 million in a failed effort to provide housing
and social services. In 1995 HUD waived regulations to allow HACMB
to refund bonds to refinance Rebecca Towers North on the condition
that HACMB use a portion of the bond proceeds to construct a women
and children housing and resource center. The HACMB spent over
$2 million for site acquisition, site improvements, architect
fees, City fees and various preliminary costs for the planned
project. However, the project had been delayed for over 5 years
and the HACMB had lost or was at risk of losing almost all of
the $5.8 million originally committed to fund the project. Also,
HACMB's failure to complete the project deprived the City's low-income
community of the needed housing and social services. We questioned
$209,570 paid to the City for fees and permits because the fees
were excessive considering the joint venture project was not constructed.
- Did not adhere to HUD requirements designed to assure the reasonableness
of Section 8 rents. The HACMB also did not timely execute new
leases for tenants who moved from one assisted unit to another,
and did not pay tenants the amounts by which their utility allowances
exceeded the family's contribution for rent. As a result, there
was inadequate assurance that HUD subsidized reasonable Section
8 rents and that tenants received the full benefit of their utility
allowances. We noted some cases where the HACMB and owners provided
false representations concerning rent reasonableness. These conditions
caused HUD to pay $9,267 in excessive subsidy.
- Had not implemented corrective actions recommended by past
reviewers of its operations to comply with procurement requirements.
For instance, subsequent to being put on notice concerning violations
of procurement requirements, the HACMB acquired legal services
and small purchases without adequate assurance that they obtained
the most advantageous cost from the most qualified sources.
We recommend that you require HACMB to: (1) obtain additional supporting
documentation or recover the $1,004,748 paid to the City, (2) reimburse
HUD $9,267 for excessive housing assistance payments (HAP) to owners,
(3) submit evidence that it has the financial capability and commitment
to complete construction of the center within a reasonable time,
and (4) establish the necessary controls to improve its operations.
Although various reviews have identified noncompliance and systemic
problems, the HACMB has shown a disregard for HUD requirements and
associated management controls. If improvements are not made within
a reasonable period of time, we recommend you consider declaring
HACMB in substantial default, and identify other entities that can
effectively carry out the programs. We also recommend that you restrict
the use of all Section 8 administrative fee reserves until you determine
and provide written notice to the HACMB that it has substantially
resolved the systemic problems in its Section 8 Program, and the
issues identified in the findings.
We provided copies of the draft report to the HACMB and HUD's Florida
State Office. We also discussed the draft report with HACMB officials
at an exit conference on August 5, 2000, and with HUD officials
on August 6, 2000. The HACMB provided its written response to the
draft report on September 27, 2000. The HACMB disagreed with findings
1 and 2 but they basically agreed with findings 3 and 4. We considered
HACMB and HUD responses in finalizing the report. The HACMB's comments
are summarized within each finding and included in their entirety
in Appendix B.
Issue Date: May 24, 2000
Audit
Report No.: 00-AT-202-1007
File Size: 520KB
Title: St. Petersburg Housing Authority, St. Petersburg, Florida
We have completed a review of the St. Petersburg Housing Authority
(Authority). The purpose of our review was to evaluate the efficiency
and effectiveness of the Authority's operations. Specifically, we
evaluated the Authority's (1) procurement policies and practices,
(2) administration of its Section 8 Program, (3) controls over and
uses of funds received from a refinancing transaction, and (4) use
of a master fund. Our report includes four findings requiring follow-up.
Issue Date: March 23, 2000
Audit
Report No.: 00-AT-202-1004
File Size: 173KB
Title: Pinellas County Housing Authority, Clearwater, Florida
We have completed a review of the Pinellas County Housing Authority
(PCHA). The purpose of our review was to evaluate the efficiency
and effectiveness of PCHA operations. Specifically, we evaluated
PCHA's: (1) use of Section 23 leased housing funds remaining after
program termination, (2) controls over property and Section 8 reserve
funds donated to a nonprofit entity, (3) calculation of Section
8 administrative fees, and (4) compliance with procurement policies
and procedures. Our report includes three findings requiring follow
up action by the Office of Public Housing.
Issue Date: February 24, 1999
Audit
Report No. 99-AT-206-1004
File Size: 2,474KB
Title: Housing Authority of the City of Sarasota Sarasota, Florida
We conducted an audit of the Housing Authority of the City of
Sarasota, Florida. The primary objective of the review was to determine
whether SHA was meeting its primary mission of providing decent,
safe, and sanitary housing for its LIH tenants and Section 8 Program
participants.
SHA did not maintain its conventional LIH in good repair and condition.
Every unit we inspected failed. This occurred because the agency
failed to: (1) perform routine and preventive maintenance, (2) spend
Comprehensive Grant Program (CGP) funds as planned, and (3) adequately
monitor or respond to the condition of the units. As a result, SHA
was not providing decent, safe, and sanitary living conditions for
many of its residents.
We recommend SHA develop a plan to improve its maintenance operations
and bring all units in compliance with Housing Quality Standards
(HQS). The plan should include complete inspection of all units,
buildings, and grounds, and a means to generate work orders to correct
HQS deficiencies. Also, the plan should include a written maintenance
plan, preventive maintenance procedures, inspection procedures and
schedules, and supervisory review procedures. We also recommend
your staff review the plan and monitor SHA's actions to ensure the
conditions are corrected.
Issue Date: September 3, 1998
Audit
Report No. 98-AT-202-1008
File Size: 322KB
Title: Metropolitan Dade Housing Agency Public Housing Drug Elimination
Program Miami, Florida
As part of a nationwide audit, we performed an audit of the Metro-Dade
Housing Agency Public Housing Drug Elimination Grants. The Agency
received $8,345,250 in PHDEP funds between 1994 and 1996. Our audit
objectives were to determine whether the Agency (1) implemented
its PHDEP awards for fiscal years 1994 through 1996 with satisfactory
outcomes and benefits, (2) prepared and submitted timely and accurate
semi-annual and final Financial and Performance Reports to HUD,
(3) executed and monitored contracts with service providers, and
(4) expended PHDEP funds for only eligible activities in accordance
with applicable requirements for the fiscal years 1995 and 1996
grants.
The Agency lacked the necessary controls to properly monitor, evaluate,
and report program results. Specifically, the Agency did not (1)
establish a system to measure and monitor its grants to ensure that
it met program objectives, (2) adequately report program results
to HUD, (3) execute and monitor contracts with service providers,
and (4) maintain proper managerial and accounting controls over
its grants. As a consequence, the Agency expended $246,821 prior
to executing its grants and $355,020 on ineligible and unsupported
activities. The Agency used grant funds for such ineligible or unsupported
activities as janitorial services, indirect costs, Christmas and
Kwanzaa events, salary expenses, field trips, and other ineligible
or unsupported activities. HUD should require the Agency to develop
and implement the necessary management controls to establish goals,
measure performance, and ensure proper administration of its grants.
Further, HUD should require the Agency to reimburse its Drug Elimination
Grant or the U.S. Treasury for ineligible costs and to resolve unsupported
costs.
Issue Date: August 31, 1998
Audit
Report No. 98-AT-202-1007
File Size: 312KB
Title: Housing Authority of the City of Sarasota Public Housing
Drug Elimination Program Sarasota, Florida
We conducted an audit of the Housing Authority of the City of
Sarasota's (SHA) Public Housing Drug Elimination Program (PHDEP)
for fiscal years 1994 through 1996. The audit was part of a nationwide
audit of the PHDEP. Our audit objectives were to determine whether
the SHA (1) implemented a system for evaluating, monitoring, and
reporting program outcomes/benefits; (2) prepared and submitted
timely and accurate semi-annual performance reports to HUD; (3)
established controls over its PHDEP planned expenditures, including
assurances that only eligible costs were charged to grants; and
(4) executed and monitored contracts with private providers.
The SHA lacked the necessary controls to properly monitor, evaluate,
and report program results. Specifically, SHA did not: (1) establish
a system to measure and monitor its grants to ensure that it met
program objectives, (2) adequately report to HUD program results,
(3) maintain proper control over its grants, and (4) execute and
monitor contracts with private providers. The agency spent $377,976
without proper assurance the funds were of intended benefit to the
community. Of the $377,976, $37,891 was ineligible because SHA charged
its grants for costs incurred prior to grant award and after grant
expiration. The SHA needs to substantially improve its control over
the program, reimburse the program or HUD for ineligible costs,
and resolve unsupported costs of $174,820. Also, HUD needs to recapture
unused grant funds of $80,732.
Date Issued: May 19, 1998
Audit
Report No. 98-AT-259-1006
File Size: 82KB
Title: Centro Campesino, Youthbuild Grants, Florida City, Florida
We have completed an audit of the Youthbuild Grants administered
by Centro Campesino Farmworker Center (CCFC) of Florida City, Florida.
Our report contains two findings requiring follow up action by the
Office of Economic Development. We are providing a copy of this
report to the auditee.
Date Issued: April 23, 1998
Audit
Report No. 98-AT-206-1005
File Size: 219KB
Title: Tampa HA, Tampa, FL
The primary objective of the review initially was to identify
contractors, vendors, employees, or other officials who may be involved
in corruption, fraudulent activities, conflicts of interest or other
illegal activities that detract from the integrity and effectiveness
of THA's Low Income Housing (LIH) and Section 8 Programs. Based
on survey work, we redirected the major thrust of our review to
evaluate the efficiency and effectiveness of THA's administration
of its LIH Program, as well as the impact of housing development
corporations on THA operations. We limited our review of the Section
8 Program to procedures related to housing quality.
MAJOR RENOVATION CONTRACTS
Between 1994 and 1996, THA awarded contracts totaling $27 million
for major renovation to resident-owned businesses (ROBs). THA awarded
the contracts under special procedures aimed at benefiting residents,
but THA abused the procedures. It awarded the contracts without
competitive bidding and to unqualified resident businesses. The
contracts exceeded estimates and program limitations, including
a $1,000,000 lifetime Federal limitation on the amount of contracts
residents can receive. THA also split bids on some contracts to
avoid formal advertising. We believe prior THA management circumvented
HUD procurement rules to select favored contractors. The practices
resulted in THA incurring $1.9 million in ineligible costs, not
achieving intended program results, duplicating costs, and favoritism.
HOUSING DEVELOPMENT CORPORATIONS
THA's relationship with housing development corporations was detrimental
to its best interests. In the last 5 years, THA spent over $1.8
million for activities that primarily benefited the corporations,
when THA's LIH Program had serious financial needs. Most of the
benefits accrued to one corporation, Tampa Housing Development Corporation
(THDC) managed by a former THA Executive Director (ED). The former
ED used his position as Director of both entities to acquire assets
and establish an income base for THDC, allowing THDC to separate
from THA control. The separation may be contrary to the corporate
documents and HUD regulations upon which THDC relied for authority.
HOUSING QUALITY
THA has not maintained its conventional housing in good repair
and condition. As a result, THA is not providing decent, safe, and
sanitary housing for many of its residents. Based on our review,
including inspection of 46 units, housing deficiencies were numerous
and serious. THA management did not perform needed oversight and
direction to assure its staff was performing routine and preventive
maintenance, and may have understaffed maintenance personnel at
some projects.
RESIDENT PROGRAMS
We question whether THA's Resident Enterprise Assistance Program
(REAP) is achieving its program goals. The program involves relatively
small contracts for routine operations, such as lawn care, with
the ultimate objective of resident economic independence. THA was
not operating the program in accordance with various HUD and THA
rules. Procurement requirements aimed at assuring competition and
cost reasonableness were ignored, non-resident contractors were
allowed to participate, and training to qualify resident businesses
for participation was sometimes overlooked. As a result, program
costs were excessive and concentrated in a few resident businesses,
and most contractors were dependent on THA contracts rather than
achieving the independence envisioned by the program. THA allowed
one contractor to exceed the $1,000,000 lifetime Federal limitation
on resident contracts.
THA controls over bank loans to residents through REAP were inadequate.
THA was not properly accounting for loan guarantee funds, adequately
monitoring the loans, and taking prudent collection actions on defaulted
loans. The lack of controls may have contributed to loan defaults,
hindered collection efforts on delinquent loans, and resulted in
less funding for future participants.
PROPERTY MANAGEMENT
THA needs to significantly improve property management to verify
tenant income and adjust rents, inspect housing units, track work
orders for housing repairs, record amounts collected from and owed
by tenants, and monitor resident employees. Inadequate procedures
resulted in inaccurate tenant rents with some tenants possibly being
ineligible for housing, housing not inspected annually, undue preferences
to resident employees, and poorly maintained records. The deficiencies
appeared to be caused by a lack of management controls, such as
systematic monitoring and follow-up.
THA also allowed some resident employees to pay reduced rents,
costing THA needed income. Based on HUD instructions, THA ordered
project managers to discontinue the practice in 1996; however, it
continued because of a lack of THA management controls.
MANAGEMENT ASSESSMENT PROGRAM
THA's 1997 Public Housing Management Assessment Program (PHMAP)
certification, and in some instances prior certifications, contained
inaccurate information which likely resulted in higher scores than
justified. PHMAP is essentially a self-assessment housing authorities
provide to HUD. Categories with erroneous information measured THA
performance in collecting rent, completing non-emergency work orders,
inspecting units and building systems, and managing resident programs.
Date Issued: March 26, 1998
Audit
Report No. 98-AT-241-1003
File Size: 201KB
Title: City of Miami CDBG, Miami, FL
The City of Miami did not have adequate controls to ensure compliance
with regulations or properly manage its CPD funds. As a result,
the City spent $5,203,607 of Community Development Block Grant (CDBG)
funds for grant administrative expenses without proper support.
Also, the City spent $484,999 for ineligible grant administrative
expenses. In addition, because the City did not efficiently and
effectively manage its loan programs and did not safeguard its assets,
approximately $9.9 million of its outstanding loan portfolio was
in default. Further, the City allocated $4.75 million of HOME Investment
Partnerships (HOME) funds for an affordable housing development
that was not feasible.
Issue Date: March 13, 1998
Audit
Report No. 98-AT-255-1002
File Size: 116KB
Title: City of Homestead, Homestead, FL
The City's inexperience in administering Federal grants, significant
turnover in key management personnel, and the magnitude of the Hurricane
Andrew disaster contributed to a number of problems. At January
1997, the City did not have an effective system to adequately track
the expenditure of HOME funds. As a result, there were significant
differences between HUD's record of draws and expenditures and the
actual expenses incurred by the City.
The City's inexperience in administering Federal grants resulted
in the inappropriate accumulation of income derived by the City
from some of its HOME activities. The City did not deposit over
$500,000 in program income into a separate local HOME account and
did not use this income before making additional draws of HOME funds
from its US Treasury HOME account. Both were violations of HOME
regulations.
The City acquired over 150 lots using, in part or in total, over
$3 million in HOME funds. Although HOME funds can be used to acquire
vacant lots, the acquisition of vacant lots must be part of an otherwise
eligible HOME project. The acquisition cost of these lots exceeded
what the City had anticipated, and the City now has insufficient
funds to complete HOME eligible projects on 37 of these 150 vacant
lots. Based on the average amount of HOME funds expended on the
acquisition of vacant lots, the total HOME dollars expended improperly
on these remaining 37 lots is over $1.4 million.
Our review identified about $56,000 in ineligible costs which were
due primarily to the City's inability to effectively track progress
payments made to contractors. On at least four occasions, the City
overpaid contractors for work related to HOME-funded projects. The
contractors overdrew the contract amount, and the City did not detect
the subsequent overpayments. Additionally, the City improperly used
$5,000 in HOME funds for the acquisition of commercial property,
and the City inappropriately paid about $9,000 in legal fees associated
with a rehabilitation project that was not eligible for HOME funding.
Date Issued: November 18, 1997
Audit
Related Memorandum No. 98-AT-211-1803
File Size: 23KB
Title: CMI, Miami, FL
The project management needed corrective actions. For example,
CMI improperly used project rental space. This violated the Regulatory
Agreement because CMI failed to obtain HUD's approval. We also noted
that CMI was overpaid $6,555, paid its management fees prior to
rent collections, and maintained inadequate fidelity bond coverage.
The owner needs to take action to prevent further violations of
the Regulatory Agreement.
Issue Date: October 22, 1997
Audit
Related Memorandum No. 98-AT-211-1801
File Size: 216KB
Title: Bethel Community Heights Apts., St. Petersburg, FL
In conjunction with Operation Safe Home and a recommendation from
the Jacksonville Area Office (JAO), we conducted a limited review
of Bethel Community Heights Apartments (BCH) project operations.
The review was designed primarily to identify diversion of project
funds or serious program abuse.
The project is an 84 unit multifamily complex located at 731 15th
Street South, St. Petersburg, Florida. Bethel Community Heights,
Inc. a State of Florida not-for-profit corporation, owns BCH. Searchwell
Thorne & Associates is the management agent (MA) for the project.
BCH's mortgage is insured by the Department of Housing and Urban
Development (HUD) under Section 221 (d) (3) of the National Housing
Act. The project receives Section 8 rental assistance for all units
under the terms of an Annual Contributions Contract and was at 92
percent occupancy at the time of our review. BCH also received a
flexible subsidy loan from HUD in 1992 for $410,654. The flexible
subsidy contract was amended in 1994 and increased to $1,351,339
to correct the physical and financial deficiencies of the project.
Issue Date: August 12, 1997
Audit
Case Number 97-AT-211-1004
File Size: 53KB
Title: Cooper-Holt, Jacksonville Beach, FL
We tested books and records of The Beaches Hamlet LTD, d/b/a Cooper-Holt
Manor, to determine whether selected project activities and expenditures
complied with HUD requirements. The managing general partner mismanaged
project operations by disregarding Regulatory Agreement and other
U.S. Department of Housing and Urban Development (HUD) requirements.
We identified ineligible and unsupported expenditures of $220,318
and $37,824, respectively.
Issue Date: September 4, 1996
Audit
Related Memorandum 96-AT-203-1825
File Size: 85KB
Title: HA of the City of Dania, Dania, FL
Four relatives or extended family members of a former acting executive
director (acting ED) misrepresented their total housing expenses
and/or preference status to obtain Section 8 assistance. The acting
ED should have at least suspected the abuses. Section 8 assistance
totaling $28,424 through March 1996 was paid on their behalf rather
than for families on the waiting list longer. We recommend termination
of Section 8 assistance for the four families, and that consideration
be given to having them reimburse the Section 8 program for all
assistance received. We further recommend a Limited Denial of Participation
(LDP) for the acting ED and the four family members.
In October 1995, the DHA Board entered into a management contract
without adequately establishing whether its terms and conditions
were in the best interests of DHA. In general, the 1-year contract
provided for the contractor to manage DHA's day to day operations
for $130,000 annually, payable pro-rata monthly. The DHA should
have conducted procurement to promote open competition, but did
not do so. There were other deficiencies including inadequate history
of the procurement, and inappropriate contract terms and conditions.
Also, an appearance of favoritism existed in the procurement of
two contracts; and accounting services were not periodically re-bid.
We recommend DHA terminate the management contract, and take needed
measures to safeguard its and HUD's interests when procuring goods
and services.
Issue Date: May 13, 1996
Audit
Report Number 96-AT-221-1004
File Size: 76KB
Title: Waters Mortgage Corp., Plantation, FL
The report identifies significant loan origination deficiencies
which warrant action by the Mortgagee Review Board. Our test of
107 loans, all to the same borrower, showed that Waters Mortgage
did not originate the 203(k) loans in accordance with HUD requirements.
Issue Date: December 14, 1995
Audit-Related
Memorandum 96-AT-201-1805
File Size: 19KB
Title: Crestview HA, Crestview, FL
Based on the results of the limited survey, we will not do a detailed
review of CHA. However, we confirmed conflict-of-interest involvement
at CHA with Section 8 properties, which your Division and CHA should
resolve. In addition, we noted the following questionable practices:
- Insurance Proceeds Were Handled Laxly, and - Tenant Association
(CHATA) Had Inadequate Records.
Issue Date: October 18, 1995
Audit
Related Memorandum No. 96-AT-201-1802
File Size: 34KB
Title: Hialeah HA, Hialeah, FL
The executive director (ED) charged the authority $62,882 for
ineligible health and insurance premiums for his divorced spouse,
ineligible and unsupported travel costs, and excessive compensatory
time. Furthermore, the ED did not follow required payment and procurement
policies, violated the conflict of interest provisions for Section
8 contracts with the mayor and a business partner, improperly withdrew
$200,000 from the Section 8 reserve account, did not properly control
staff resources, and did not ensure compliance with Section 8 tenant
preferences, salary comparability and cost allocation requirements,
and pooling of funds requirements.
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